Full goodwill method
IFRS 3 permits an acquisition-by-acquisition choice between fair value and the proportionate share of identifiable net assets for non-controlling interests that are present ownership interests and entitle holders to a proportionate share of net assets on liquidation. Add consideration, the fair value of any previously held interest and the chosen measure of NCI, then deduct the fair value of identifiable net assets. Other NCI components follow applicable measurement rules.
Worked example
A parent pays $800,000 for 80% of a business. NCI fair value is $210,000 and identifiable net assets are $900,000. With no previously held interest, full goodwill is $800,000 + $210,000 − $900,000 = $110,000.
Common mistake
Assuming the parent’s 80% share of goodwill is the whole recognised amount, or using 20% of net assets while calling the result full goodwill.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |